Redfin Stock Breaks Out on Bullish Analyst Commentary

Wedbush raises price target to $28

Redfin Corporation (RDFN) shares rose more than 7% during Wednesday's session after Wedbush reiterated its Outperform rating and raised its price target from $26 to $28 per share. The analyst believes that new pricing announced late last year will create better-than-expected transactions and brokerage revenue per transaction during the year.

At the same time, the Mortgage Bankers Association's Market Composite Index showed a 30.2% increase in seasonally-adjusted loan application volume. The Refinancing Index also rose 43% from the previous week and is 109% higher than the same week a year ago. The strong start to 2020 comes as the 30-year fixed mortgage rate hit its lowest levels since September 2019.

In December, DA Davidson analysts upgraded Redfin stock from Neutral to Buy with a price target of $25 per share. Analyst Tom White said that the company's mortgage and title business could generate up to $55 million in EBITDA by 2025 and represent up to 40% of revenue. The analyst also cited the company's strong listing share trends.

Chart showing the share price performance of Redfin Corporation (RDFN)
TrendSpider

From a technical standpoint, the stock broke out from a rising wedge pattern to fresh 52-week highs. The relative strength index (RSI) moved further into overbought territory with a reading of 80.36, but the moving average convergence divergence (MACD) experienced a bullish crossover. These indicators suggest that the stock could see some near-term consolidation, but the long-term outlook remains bullish.

Traders should watch for some consolidation above trendline resistance at $22.50 or prior highs at $23.47 before resuming its uptrend. If the stock breaks down from those levels, traders could see a move to retest trendline support at $21.46 or the 50-day moving average at $20.70, although that scenario appears less likely given the bullish momentum.

The author holds no position in the stock(s) mentioned except through passively managed index funds.

Take the Next Step to Invest
×
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.
Service
Name
Description